Since 1975
  • facebook
  • twitter

A new model for climate financing

At the COP28 conference last December, it was estimated that nearly $6 trillion in climate financing will be needed by 2050(AFP)
At the COP28 conference last December, it was estimated that nearly $6 trillion in climate financing will be needed by 2050(AFP)
Short Url:
07 Mar 2024 11:03:06 GMT9
07 Mar 2024 11:03:06 GMT9

Practically nowhere in the world has escaped the effects of climate change and global warming. From the North Pole to Antarctica, Chile to China, every country has been on the receiving end of the immense damage caused by extreme weather events.

But of all regions, Asia-Pacific stands out in terms of the impact of changing weather and a warming world. According to many reports, it is the most vulnerable region in the world as far as the effects of climate change are concerned. Over the past 60 years, temperatures have been rising faster there than anywhere else. With extreme climate events becoming more frequent and intense, the region faces the risk of losing more than a third of its gross domestic product as a result of climate change.

Asia-Pacific is made up of more than 50 countries and accounts for about 30 percent of the world’s landmass. Almost 4.8 billion people live there, which is about 60 percent of the total global population. The rippling effects of climate change in the region are therefore felt around the world, not only because Asia-Pacific is the biggest region geographically but also because of the sheer number of people living there. In this sense, what happens in Asia-Pacific affects far more people than anything in any other part of the world.

Climate change threatens not only the long-term well-being of people in the region, but also the decades of progress made there in terms of tackling poverty, providing better nutrition and improving food security, as well as advancing overall human development.

So far, what we have seen is that almost all the sources of funds for climate finance have failed to deliver

Ranvir S. Nayar

With little sign of the climate crisis easing, or even the prospect of an effective global agreement that could be successful in at least slowing global warming, Asia-Pacific, like the rest of the world, is left with two options: adaptation and mitigation. Together, they could help cushion the impact of climate change and help to cope with the economic damage that is being inflicted on the region in terms of floods, forest fires, landslides and drought.

However, both adaptation and mitigation efforts require trillions of dollars of investment and, though the Asia-Pacific is certainly home to some of the richest countries in the world, including Japan, South Korea and Singapore, most of the people in the region are very poor. In terms of absolute numbers, it has the largest number of people living in extreme poverty.

At the UN’s COP28 climate change conference in Dubai last December, it was estimated that nearly $6 trillion in climate financing will be needed by 2050. However, developing countries say the actual amount required will be much higher, because the effects of climate change are growing more intense, far-reaching and longer lasting, so the amount of money needed to cope with them has already gone far beyond the estimates. Some believe the true figure that will be needed by 2050 is closer to $50 trillion.

Against this backdrop, a recent report by the World Economic Forum said that raising funds on such a scale will require money from all available sources, including philanthropy, and it called for the establishment of what it called a public-private-philanthropic partnership.

Certainly, there is no disputing the fact that dealing with global issues such as climate change calls for a global action and funds to be raised from multiple sources, with contributions from all stakeholders, including corporations, governments, nongovernmental organizations, and certainly the rich or well-to-do around the world.

A public-private-philanthropic partnership would therefore be a welcome move, provided it is set up in such a way to ensure that it adequately reflects the roles and responsibilities of each partner.

So far, what we have seen is that almost all the sources of funds for climate finance have failed to deliver. The issue has been on the table since 2012, when developed countries agreed to pay $100 billion every year to help the developing world prepare for climate change. Donor countries have fallen so far short of their promises that most observers believe it was more of a bluff than a genuine commitment. However, the need for money to address climate-related issues has not disappeared in the absence of the promised funding.

It must not turn into yet another platform for empty promises that leaves the public sector holding the baby

Ranvir S. Nayar

In the meantime, the situation has grown dramatically worse, the need for money to address it has risen sharply and, though several months have passed since COP28, there is still no clarity on how the financing should be organized, by whom, to what timescales and who will decide the disbursement of the funds.

All of these questions are divisive issues and reaching a global consensus on any of them will be extremely difficult, unless the parties expected to pay up actually get on board and set the ball rolling by setting a strict, legally binding timetable for their contributions, so that an organization such as the UN can then decide where the money should go.

As far as the responsibility for funding the efforts to address climate change is concerned, it rests not only on the shoulders of the governments of wealthy countries, but equally on the super-rich corporate conglomerates that are each sitting on tens of billions of dollars of profits that, in many cases, were earned in ways that damaged the climate.

However, big business has not even taken the first steps needed to cut down on its own carbon footprint, let alone contribute to the climate-finance kitty. As a result, carbon emissions keep rising, adding to the misery.

Hence, the public-private-philanthropic partnership model proposed by the World Economic Forum, if implemented, needs to be established in such a way that avoids previous pitfalls by ensuring that each private company that signs up makes time-bound, legal and moral commitments to contribute to the funding.

It must not turn into yet another platform for hollow words and empty promises that, in the end, leaves the public sector, which is directly accountable to the people, holding the baby. Establishing such effective partnerships might not be easy, and certainly holding companies that fail to play their part in the process accountable will be complex, but thanks to rising public awareness about climate change and the insidious role businesses have played in getting us to the point we stand at today, there are few companies that will want to be seen by customers as anything but green-thinking.

Public-private-philanthropic partnerships must also guard against being turned into a mechanism for “greenwashing,” yet another fad that has been used by businesses and politicians all over the world.

If adequate checks and balances are put in place to address these, and other, challenges, such partnerships could certainly play an important role in helping to raise the $50 trillion needed to tackle climate change over the next 26 years.

  • Ranvir S. Nayar is the managing editor of Media India Group and founder-director of the Europe India Foundation for Excellence.
Most Popular

return to top